It is being described as the ‘mother of all trade deals’. The India-EU trade pact signed on Tuesday comes after many years of hesitation because both entities were not convinced of it being as mutually beneficial as required. It has finally received the final push from the ‘tariff aggression’ of Donald Trump’s United States. According to experts it will still take time to take effect (by next year) as the member nations of the EU will require to ratify it, but that is a good thing because it should unfold as comfortably as possible for all concerned.
India, under Prime Minister Modi, also projected the event in a big way as a diplomatic message to the US – there are other options! In that sense it is not just an economic deal but a larger strategic initiative that, if it delivers as hoped, will bring significant changes to the world order. It signifies the realisation among EU countries that, from various perspectives, India has a major global role to play to bring about strategic balance.
It may be noted that ‘the EU estimates the deal could double EU exports to India by 2032 and generate annual duty savings of up to 4 billion euros on European products. The bloc accounts for nearly 17 per cent of India’s total exports, giving Indian businesses a huge market to tap into with easier access under the FTA’.
India and the European Union also signed a mobility pact aimed at easing the movement of Indian students, workers, and professionals across EU countries, which is good news in a more immediate way. Also of significance is the fact that the Summit between the two sides also launched an EU-India Security and Defence Partnership.
Concern is being expressed that cheaper and better quality goods from the European Union would endanger Indian industry and manufacturing. This was the mindset that had hindered the growth of the economy in the past, as ‘protected’ sectors failed to innovate and become competitive. Liberalisation was a crucial factor in bringing about the necessary change. Free trade is the next phase in this process, with only a few sectors continuing to receive protection for various reasons. Quite obviously, there may be some negative consequences, but it is expected that the overall result will be a big boost to the two economies, significantly raising the overall quality of life, particularly in India. (It remains to be seen how the US will react!)
